London, England: The Sustainable Markets Initiative (SMI) announced today that its Asset Manager and Asset Owner (AMAO) Task Force has introduced its new Transition Categorisation Framework, which complements industry ambitions to achieve net zero. The AMAO Task Force consists of 34 AMAOs from across the globe and are all members of SMI. The intention of the framework is to categorise assets that fulfil the objectives for a pathway to a net zero transition, at both a company and a project level and ensure that investors are not simply disinvesting from the more difficult sectors especially in emerging economies.

“Through the Sustainable Markets Initiative, our Task Force is working to find scalable ways for institutional investors to facilitate the reallocation of capital toward sustainable solutions, using capital already invested in companies and new capital investments directed at climate mitigation and adaptation projects,” said Hendrik du Toit, Founder and Chief Executive Officer, Ninety One, and Sustainable Markets Initiative and AMAO Task Force member. “We must accelerate the path to net zero through investment in climate resilience solutions, innovation, clean technologies and by mobilising capital to finance more sustainable investment into the transition. This includes ensuring more transparency and guidance.”

Climate change is one of the biggest global societal challenges we face today. Charting a path to net zero will take the private and public sector working together to achieve scale and make critical impact across sectors. Impact investments with a purpose and investing in constructive capital are important steps forward.

The transition categorisation framework identifies five categories of transition assets, four of which qualify as Paris-climate agreement aligned. The categorisation enables investment into sectors and regions vital to the net zero transition.  The SMI AMAO Task Force is working with climate specialist organisations to support the appropriate metrics, thresholds and timelines required by a company or project to qualify for each transition category. The SMI’s Energy Transition Task Force recently developed a transition rating methodology which complements this categorization and could help determine assets that would qualify for one or more of the categories.  

The SMI AMAO Task Force’s aim is for investors to align and adopt the categorisation as an enhancement to existing net zero strategies. Doing so would help guide effective and meaningful transition investment through general portfolios or specific vehicles that fund pathways to net zero in critical sectors.

Read more about the Framework: Sustainable Markets Initiative Asset Manager and Asset Owner Transition Categorisation Framework

View the full PDF press release here